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A supply-side approach to corporate political activity: Performance consequences of ideologically driven CPA

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  • Greiner, Michael
  • Lee, Jaegul

Abstract

Corporate political activity (CPA) is an important area of research due to the high level of CPA in which many firms engage. Prior research has focused on the demand side of the political market. In this paper, we consider how choices made by CEOs regarding their interaction with the supply side of the political market can have performance implications for the firm. In particular, we argue that where CPA focuses less on supporting extreme ideologies, these investments in CPA will be positively associated with higher performance, and thus are more effective. Next, relying on agency theory, we argue that firms in which top managers are less likely to behave opportunistically will engage in such effective CPA. We test our theory on a panel of archival data generated by combining business data with political records, and we find strong support for our arguments.

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  • Greiner, Michael & Lee, Jaegul, 2020. "A supply-side approach to corporate political activity: Performance consequences of ideologically driven CPA," Journal of Business Research, Elsevier, vol. 115(C), pages 25-37.
    • Handle: RePEc:eee:jbrese:v:115:y:2020:i:c:p:25-37
    DOI: 10.1016/j.jbusres.2020.04.038
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